Wesfarmers announces Coles sales up 4.3%: Economy Roundup

Retail giant Wesfarmers has recorded better-than-expected annual sales growth at its Coles supermarket chain, with sales up 4.3% to $29.7 billion compared to the previous financial year.

Analysts expected about 3.1% growth. The company’s shares grew by 3% this morning to $30.07 after the announcement was made.

Chief executive Richard Goyder said in a statement the result was solid, and even though food and liquor prices dropped 1.4% in the quarter, sales grew by 4.2% for the quarter and 5.6% for the year.

Total sales at Coles grew by 5.5 over the quarter to $7.4 billion. “This leaves the group well placed for the 2011 financial year,” Goyder said.

However, same-store sales at Target dropped by 6.2%, even though total sales grew by 0.9% to $3.81 billion for the financial year.

“The quarter to June 2010 proved a difficult trading period for Target,” Target managing director Launa Inman said.

Meanwhile, Kmart recorded total sales growth of 0.4% to $4 billion, with Wesfarmers saying the total overhaul of the chain is continuing with an emphasis on providing cleaner stores and faster check-out times.

Bunnings also recorded solid growth, with home improvement sales up 6.9% to $1.46 billion, compared to $1.37 billion in 2009.

QBE Insurance Group has announced it expects net profit for the year ended 30 June will drop by 40%, due to a drop in one-off gains and equity losses.

“Due to the substantially lower net investment income on shareholders’ funds, preliminary net profit after tax is expected to be down around 40% when compared with the same period last year,” the company said this morning.

“The continued excellent underwriting results have been more than offset by significantly lower investment income from reduced interest yields, the fall in equity markets and one off gains in the first half of 2009,” chief executive Frank O’Halloran also said.

The company expects interim dividends will be maintained at $0.62c per share.

Meanwhile, various reports suggest BP chief executive Tony Hayward is on his way out after the company’s handling of the oil spill in the Gulf of Mexico, which is still ongoing.

Sources have told Reuters the company has decided Hayward should resign his position and this will be announced within the next 36 hours. It is understood US executive Bob Dudley will replace him as chief executive. “The details are being worked out,” one source told Reuters.

Anger has grown in the United States against Hayward, as he made a number of gaffes during press conferences addressing the spill, and appeared callous during his appearance before Congress.

Share market opens higher after strong overseas leads

The Australian share market has opened higher today, following solid results from European and American stock markets late last week.

The benchmark S&P/ASX200 index was up 38 points or 0.86% to 4496.7 at 12.15 AEST, while the Australian dollar remained high at US89c due to positive results from a number of stress tests placed on the European banks.

AMP shares gained 0.7% to $5.39, while Commonwealth Bank shares gained 0.8% to $51.67. Westpac rose 1.9% to $23.16 as NAB gained 2.5% to $24.98.

Meanwhile, The Australian has reported Centro Properties Group has launched a sales process to find a partner to help manage its $1 billion property portfolio.

The publication reports a document has been sent to prospective buyers, and it comes as the company is looking to increase its turnaround program. Its 50 shopping centres would be included in the program.

Overseas, The Times has reported Qantas has been named by British Airways as part of an air cargo price-fixing cartel. BA has issued legal proceedings, according to the publication, but a Qantas spokesperson told Reuters no such communication has been received.

“We have not yet received any formal notification of this action from British Airways and will not be in a position to comment until something has been received and assessed,” a Qantas spokesman said.

Source reveals information on GFC risk swapping

A source has told Reuters that Morgan Stanley, Citigroup and JPMorgan Chase were the banks which sold Goldman Sachs protection against the risk of American International Group collapsing.

It is understood Goldman Sachs has turned over a list of these banks to the Financial Crisis Inquiry Commission. That list has not yet been made public.

Meanwhile, figures from the Federal Deposit Insurance Corporation show bank failures in 2010 have reached 103, with regulators seizing seven small banks. Failures are expected to peak this quarter.

The biggest was Crescent Bank and Trust with 11 branches, and $US1.01 billion in assets.

Despite the bad news, Wall Street investors have been given a confidence boost with a decision by General Electric to raise its annual dividend by 20%.

“We are able to restore the GE dividend at a historical payout level for 2010 earlier than previously anticipated and to extend our share buyback program because of continued strong cash generation, recovery at GE Capital, and solid underlying performance in our industrial businesses,” GE chief executive Jeff Immelt said in a statement.